TMI Blog2018 (8) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... th the cases otherwise the Bench could have decided the case, in our considered opinion, these observations by Commissioner Appeal in Appeal Memo is not only objectionable but it is not permissible under law. Even the tribunal while setting aside the order of the First two Authorities has not given any reasons and simply accepted the appeal memo and has allowed the appeal without reversing the finding arrived at by both the authorities and observed that the Supreme Court judgment is not binding. The notification dated 1st August, 1997 will lapse on 1st August, 1997 and could not be applied subsequently. The first two authorities rightly observed and allowed the proceedings in favour of petitioner/assessee and tribunal as well as two Commissioners of Excise department exceeded the jurisdiction and committed an error in making observations against the High Court and the Supreme Court decisions. The order of the tribunal is quashed and set aside and that of the original authorities is restored - Petition allowed. - D.B. Civil Writ Petition No. 14326/2016 - - - Dated:- 7-3-2018 - MR. K. S. JHAVERI AND MR. VIJAY KUMAR VYAS, JJ. For The Petitioner(s) : Mr. Sameer Jain w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in such cases. Learned counsel further submit that direction can be given to the Assistant Commissioner to pass a fresh excise duty liability order in the light of the directions given by their Lordships in the case of Eicher Motors Ltd. Anr. Vs. U.O.I. Ors. (supra) Learned counsel for the respondent has not controverted this fact that identical issue has been considered by their Lordships in the case of Eicher Motors Ltd. Anr. Vs. U.O.I. Ors. (supra). Considering the submissions, we remit the matter back to the Assistant Commissioner with the direction to pass a fresh order regarding excise duty liability in the light of the direction given by their Lordships in the case of Eicher Motors Ltd. Anr. Vs. U.O.I. Ors. (supra). 4. The Department has not challenged this order and accepted the same and hearing proceeded further and Assistant Commissioner believing that the judgment of the Supreme Court is applicable, has allowed the original application and the notice which has been issued against the present petitioner was dropped and credit was allowed by order dated 10.05.2006 against which appeal was preferred by the Department which also came to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Hon ble High Court therefore the same has attained finality, and cannot be appealed against. 5. The Additional Commissioner while passing the order dated 5th June, 2007 while reiterating the grounds of appeal averred the same as under:- 2. The assessee filed Civil Writ petition before the Hon ble Rajasthan High Court for getting quashed the Notification No.33/1997-CE(NT) 34/1997- CE(NT) both dated 01.08.1997 and in the petition it was no where claimed that this petition involves the issue similar to the case of M/s Eicher Motor s Ltd., (supra) decided by the Hon ble Apex Court. The counsel of the petitioner Shri Gupta, brought to the notice of the bench only at the time of hearing that similar issue has been considered by their lordships in the case of M/s Eicher Motor s and the Government Counsel at that stage could not controvert the same as he was not aware about the issue involved in the Eicher Motor s case instantly. Even the Hon ble High Court was not sure about the similarity of the issue in both the cases otherwise the bench itself could have decided the case. Whereas the Hon ble Bench had remitted the case to the Assistant Commissioner for decision. Therefore i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods (hereinafter referred to as the final products ), as the Central Government may, by notification in the Official Gazette, specify in this behalf, for the purpose of allowing credit of any duty of excise or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereinafter referred to as the specified duty ) paid on the goods used in or in relation to the manufacture of the said final products [whether directly or indirectly and whether contained in the final product or not] (hereinafter referred to as the 'input') and for utilising the credit so allowed towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the said notification, subject to the provisions of this section and the conditions and restrictions that may be specified in the notification: Provided that the Central Government may specify the goods or classes of goods in respect of which the credit of specified duty may be restricted. 18. Rule 57C states that no credit of duty paid on a final product may be allowed if the final product is exempt from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgement thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provision in the Rules which provides for a reversal of the credit by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of which such inputs were used. The condition required for the same was that the credit of duty paid on inputs could have been used for discharge of duty/liability only in respect of those final products in the manufacture of which such inputs were used. Thus it was claimed that there was a nexus between the inputs and the final products. In 1995-96 Budget MOD VAT scheme was liberalized/simplified and the credit earned on any input was allowed to be utilised for payment of duty on any final product manufactured within the same factory irrespective of whether such inputs were used in its manufacture or not. The experience showed that credit accrued on inputs is less than the duty liable to be paid on the final products and thus the credit of duty earned on inputs gets fully utilised and some amount has to be paid by the manufacturer by way of cash. Prior to 1995-96 Budget, the excise duty on inputs used in the manufacture of tractors, commercial vehicles varied from 15% to 25%, whereas the final products were attracted excise duty of 10% or 15% only. The value addition was also not of such a magnitude that the excise duty required to be paid on final products could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of the earlier scheme necessarily the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said rule would result in affecting the rights of the assessees. 6. We may look at the matter from another angle. If on the inputs the assessee had already paid the taxes on the basis that when the goods are utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16.3.95 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. 8. Counsel for the respondent has relied on the following decisions: ( i). In Raymond Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and equally the Judgment in the case of Collector of Central Excise vs. Dai Ichi Karkaria Ltd. reported in 1999 (112) ELT 353 can be of no assistance. ( ii). In Arun Smelters Ltd. vs. Customs Excise and Service Tax Appellate Tribunal, South Regional Bench and Ors. , it has been held as under :- 19. Placing reliance on the decision of the Hon'ble Apex Court in Hans Steel Rolling Mill v. Commissioner of Central Excise, Chandigarh, : 2011 (265) ELT 321 (SC) : (2011) 3 SCC 748 : LNIND 2011 SC 284, it is the further submission of the learned counsel for the respondent that the compounded levy scheme, introduced in the Central Excise Act, 1944, is a comprehensive scheme, wherein, Rule 96ZO of the Rules, applicable to the case on hand, stipulate the method, time and the manner of payment and it also contains provisions, relating to payment of interest and penalty, in the event of delay, in payment of duty. ( iii). In Commissioner of C. Ex., Pondicherry vs. Sharadha Castings (P) Ltd. 2012 (277) ELT 37 (Madras) , it has been held as under :- 1. The appellants are engaged in the manufacture of Non-alloy steel falling under Chapter sub-heading 7206.90 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and who is required to pay duty under Section 3A of the Central Excise Act, 1944 (1 of 1944), shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export, Rule 57H(7) refers to a manufacturer who opts for exemption from payment of whole of the duty and states that such manufacturer shall be required to pay an amount equivalent to the credit, if any, allowed to him in respect of the inputs lying in stock or used in any finished excisable goods lying in stock. It is not the case of the Department that the respondent is a manufacturer who opted for exemption from payment of whole of the duty. In fact, the Tribunal in its order had observed that the assessee had come under the Compound Levy Scheme with effect from 1-8-1997 and when they switched over to this, the credit lying unutilised, be in the inputs or in the final products, lapsed in terms of sub-rule (17) of Rule 57F of the Central Excise Rules, 1944. The Tribunal is therefore correct in its conclusions. We are unable to accept the objections raised by the appellant. In our opinion, the substantial questions of law do not arise for cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 96ZO(3) at their option, cannot claim the benefit of determination of production capacity under Section 34(4) of the Act which is specifically excluded. We find that the view taken by the Andhra Pradesh High Court in Sathavahana Steels Alloys (P) Ltd. v. Government of India (supra) and the similar view expressed by the Division Bench of the Allahabad High Court in Civil Miscellaneous Writ Petition No. 1127 of 1999 Jalan Castings (P) Ltd. v. Commissioner of Central Excise and Ors. disposed of on February 28, 2000 is reasonable and correct. We overrule the view taken by the Allahabad High Court in Pravesh Castings (P) Ltd., Kanpur Nagar v. Commissioner of Central Excise, Allahabad and Anr. (supra). 12. On the reasoning adopted by us and bearing in mind that in taxation measures composition schemes are not unknown and when such scheme is availed of by the assessee it is not at all permissible for him to turn around and ask for regular assessment, we think, there is no substance in the contention urged on behalf of the respondents. 13. There are a few peripheral submissions made on behalf of the respondents that in several cases the Commissioners have wrongly fixed the fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the rules for collection of the duty did not disturb the essence of the tax and, therefore, exigibility of the tax at the destination point in the hands of the consignee could not be legitimately questioned. In Shinde Brothers v. Dy. Commr, Raichur- AIR 1967 SC 1512, the Supreme Court reiterated the characteristics of excise duty. It was pointed out that duty of excise is clearly related to production or manufacture of goods but it does not matter if the levy is made not at the moment of production or manufacture but at a later stage and that if the duty is collected from a retailer it would not necessarily cease to be an excise duty. These authorities clearly establish that although a duty of excise is a tax on manufacture or production of goods, it need not necessarily be levied at the stage of manufacture or production and may be levied at a later stage and may even be collected from a retailer. It is in the light of these principles that Section 3 of the Act has to be construed. This Section imposes excise duty on all excisable goods-which are produced or manufactured in India. The Section further imposes this duty at the rates set forth in the First Schedule. The manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manner of levy of duty under Section 3. 7. We have already referred to the observations of Gwyer, C.J. in Boddu Paidanna's case (supra) that the taxing authority does not ordinarily levy excise duty at the stage of manufacture or production for it is more convenient administratively to levy the duty when the goods leave the factory for the first time. Rule 9-A(l)(ii) is in line with this practice. Further, a very strong circumstance which supports our conclusion is the existence of Rule 9-A from January 1945. The scheme under Rule 9-A is that the crucial time for levy of duty is the time when the goods are removed or when the duty is paid under the rules. This scheme has continued right from 1945 when the rule was first introduced. The excise tax is one of the most important sources of revenue. The Act is under continuous vigilance of Parliament and the rates of duty are changed from time to time by the annual Finance Acts or by notifications issued under Rule 8 to give effect to Budgets. Parliament must have known that Rule 9-A made by the Central Government applies the rate of duty prevailing on the date when the goods are removed. The inaction of parliament during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n applying the rates prevailing on the date of removal. The conclusion reached by us is in line with the decisions of the Bombay and Gujarat High Courts although the vires of Rule 9A was not specifically challenged in them [see Union of India v. Elphinstone Spinning Weaving Mills Co. Ltd.-1978 ELT (J 680) (Bom.), Radhakrishna Ramnarain Limited v. R. Parthasarathy and Ors.-1980 ELT (J 709) (Bom.) and Alembic Chemical Works Co. Ltd., Baroda v. Union of India and Ors.-1979 ELT (J 258). ( vi). In Cellular Operators Association of India and Ors. vs. Union of India and Ors. (15.02.2018 - DELHC) : MANU/DE/0710/2018, it has been held as under :- 10. Omission of a provision signifies deletion of that provision and is normally not treated as different from repeal. The repeal/omission in the present case was not made retrospectively, but applied prospectively. Manufacturers and output service providers were entitled to take benefit of EC and SHE credit on the EC and SHE payable on manufactured goods and output services on or before the cut off date, i.e., 1st March, 2015 in case of manufactured goods and 1st June, 2015 in case of taxable services. They have not been allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st June, 2015 respectively, in the manner that they got included in, and formed a part of, the higher tax rate applicable to excise duty and service tax. Noticeably, the service tax rate had gone up by 2%, from 12% to 14%, with the intent to increase it further in view of implementation of the General Goods and Services Tax in future. In the case of excise duty, the increase was only marginal, from 12% to 12.50%. Pertinently, no statement or assertion was made that the benefit of unutilized EC and SHE credit would be given against excise duty and service tax. The use of the words subsumed with reference to the two cesses could well indicate that there would not be an increased tax burden being put on the payers or the consumers, as EC and SHE were being withdrawn. Noticeably, the two cesses and the excise duty and the service tax were always treated as different and separate and crossutilization was never permitted. 9. Heard the learned counsel for the parties. 10. It is well settled principle of law that the law declared by the Supreme Court is binding on all and when the Division Bench of this court has held that the judgment is applicable against which no SLP was pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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